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Franklin Raines Absent

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Well-known member
Feb 10, 2005
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Montgomery, Al
I thought OT said the regulators were taking an "8 year coffee break"?

Investor Daily Subprime Scandal: Obama adviser Franklin Raines is glaringly absent from an SEC lawsuit against Fannie Mae and Freddie Mac executives for defrauding investors. How convenient.

Raines first plunged Fannie into the subprime abyss as its chairman and chief executive from 1999 to 2005 while cooking the mortgage giant's books to score fatter bonuses for himself and other Democrats on its board.

In its complaint against Fannie, however, the Obama administration covers only the period from 2006 to 2008 and names Raines' successor and former protege, Daniel Mudd, as the main defendant. Raines is nowhere to be found in the SEC's 60-page court filing.

Instead, Mudd and two of his top aides are accused of covering up the full extent of Fannie's subprime exposure. But that exposure and cover-up began under Raines, who rolled out Fannie's first subprime mortgage line, known as Expanded Approval.

The program let Fannie's customers rubberstamp borrowers who would have been formerly classified as "Refer with Caution" by Fannie's automated underwriting system.

Raines had Fannie buy billions of dollars worth of the risky mortgages, which were described in internal emails as "clearly subprime," to meet "affordable housing" quotas set by HUD. In May 2001, Mudd wrote a memo to his boss warning that EA loans "are the highest default risk loans we have ever done."

It was also under Raines that Fannie partnered with Countrywide Financial to buy, in increasing volumes, the subprime lender's Fast & Easy no-documentation mortgages. These loans were specifically targeted toward borrowers with weaker credit histories.

When these high-risk loans started defaulting by the mid-2000s, Fannie did not include them in its portfolio disclosures to Wall Street. It claimed a fraction of the subprime exposure it actually had.

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But Fannie's mission regulators in Washington were perfectly aware of the subprime exposure. After all, it was HUD that set them on that dangerous path in 2000 when it raised the affordable-home loan target to fully 50% of total mortgage holdings — and demanded Fannie specifically load up on subprime home loans to meet the higher target.

The new policy remained in effect through late 2004, when Raines was forced to resign under an ethical cloud, and beyond.

Raines, who was appointed to Fannie's board by President Clinton, coordinated the reckless foray into subprime with former HUD chief Andrew Cuomo, who announced the new goals in 2000, explaining:

Fannie's and Freddie's "expanded presence in the subprime market could be of significant benefit to lower-income families, minorities and families living in underserved areas."

Raines was fully on board the scheme. "We have not been a major presence in the subprime market, but you can bet that under these goals we will be," Raines said at the time. "We can bring lower-cost credit to thousands and thousands of African-American families."

By 2004, Raines scrambled to find even more subprime loans to meet the goals. That year he begged lenders gathered at the Mortgage Bankers Association of America's annual convention in San Francisco for more subprime loan production.

"We have to push products and opportunities to people who have lesser credit quality," Raines said.

While Raines was soliciting subprime loans, the subprime market exploded from 7% of the mortgage industry in 2001 to a peak of 25% in 2004.

Raines makes his protege Mudd look like the paragon of prudent banking. But the administration in its belated lawsuit tries to pin everything on Mudd, while the prime suspect gets off scot-free.

Let's hope the case goes to trial, because Mudd in his defense might have a thing or two to say about the reckless course his old boss set him on. It's Raines whose name should be mud.
Let me see if I read this right Raines was the CEO of Fannie and Freddy and he was appointed by President CLINTON the DEMOCRAT President in 1999 pre 2001 IE pre Bush taking office. The same year President CLINTON the DEMOCRAT President was warned that Subprime mortgages were risky and could bring down the Housing market by the New York Times a very Liberal rag. Raine who again was appointed by Clinton cooked the books to hide what he was doing with Fannie and Freddy so his bonuses would be larger than he deserved if the truth was known.

So Please explain to me WHY it was the BUSH BUST when the economy tanked due to actions of a DEMOCRAT PRESIDENT CLINTON APPOINTEE?
Because that what oldtimer says, it is his story and he is sticking too it :D :D :D Truth be damned


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